The Worst May Be Over, but Watch the S&P Close

Friday's decline put the June S&P futures at a low of 1,626.25, below the major 1,631 support level. Investors hit the sidelines as they began to fear that the backstop put in place by the Federal Reserve, to the tune of $85 billion in bond purchases a month, will be curtailed.

On Monday, ahead of ISM Manufacturing data, June S&P futures reached to retest the 1,639-1,642 pocket, as many have begun to believe that a curtail in bond purchases is already priced in following the drop.

Look for a close below 1,631 as a failure to rally, and a retest of 1,626 as a bad sign for the market. Solid data out of Europe have had a hand in helping this market stabilize, and we believe the worst may be in. But the closing level will be important, and a close back above 1,639 to 1,641 is what all bullish traders will be looking for.

_ Rich Ilczyszyn is founder and CEO of iiTrader. Follow him on Twitter: @iiTrader

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